Tight labor market expected to continue to limit hiring at small businesses
By Joyce M. Rosenberg
AP Business Writer
NEW YORK (AP) — New reports from payroll company ADP show that small businesses are lagging behind larger companies in hiring, a trend that’s not expected to change anytime soon.
ADP’s monthly report on small business employment released last week showed companies with up to 49 employees created 63,000 jobs during January. That’s down from an upwardly revised 107,000 in December. ADP counts the jobs at its small business customers in compiling its report.
In a separate report that looked at employment trends in the fourth quarter of 2018, ADP found that small business employment grew 0.5 percent from a year earlier, slower than the 1.7 percent growth at all the companies it tracks.
The tight labor market will continue to limit hiring at small businesses, ADP said in its report: “This trend will persist as firms find it increasingly difficult to find and hire qualified workers.” It also noted that small companies can be at a competitive disadvantage because they can’t match the salaries and benefits that larger companies provide.
The fourth-quarter report showed the disparity between small and large company compensation. Wages rose 1.9 percent from a year earlier at small businesses, compared to 3.4 percent at companies of all sizes and 4.9 percent at companies with more than 1,000 employees.
Small business owners have said in surveys over the past few years that they’re having a hard time filling their open positions. In a survey released in November by Bank of America, 58 percent of the more than 1,000 owners surveyed said they had difficulty in hiring. More than 80 percent said they have offered bonuses, flexible hours and work locations and other benefits to attract candidates.
Small business hiring in 2018 showed the impact of companies’ struggles to find staffers. ADP tallied an average of nearly 52,000 jobs added each month, down from the 56,000 small businesses added on average each month during 2017. Month to month hiring was erratic last year, and ranged from a gain of 21,000 jobs in August to December’s 107,000.
Hiring was also affected by owners’ discomfort with taking on risk. Staffing strategies changed following the Great Recession, with owners hiring when they had the revenue to justify the expense rather than hiring in anticipation of getting new revenue. Some owners, mindful of concerns about the economy’s ability to sustain its strong growth, have said they’re slowing their hiring to be on the safe side.
